GIBSON MAY BE GOOD FIT FOR AMERICAN GREETINGS

While American Greetings Corp. in Brooklyn is looking for ways to grow its business, the company isn't saying if it still is interested in buying its beleaguered rival to the south -- Gibson Greetings Inc. in Cincinnati.
The usually hush-hush American Greetings is keeping mum on the matter except when it comes to maintaining the company line.
'We have said for some time we are looking to grow our company and acquisitions could be a way to grow,' said Jim King, manager of investor relations for American Greetings.
Indeed, the second-largest greeting card company in the United States announced last week a deal to buy the assets of Contempo Colours, a Kalamazoo, Mich., party goods maker with distribution in mass retail and party store outlets nationwide.
But an acquisition of Gibson Greetings, the country's third-largest card company, would have some definite benefits for American Greetings, said a local watcher of both companies.
'They (American Greetings) would be interested in acquiring Gibson,' speculated Jeffrey Stein, an analyst with McDonald Investments Inc. in Cleveland.
'The economics would be favorable for them,' Mr. Stein said. 'They would be getting a customer list. There would be no need to deal with duplicative plants...and American Greetings could add $300 million in revenues.'
An American Greetings acquisition of Gibson Greetings also would give the local company another five to six percentage points to add to its approximate 30% share of the greeting card market, Mr. Stein said. Mr. Stein said Hallmark Cards Inc. would still have the largest slice of the market. He put Hallmark's share at about 42%.
Gibson Greetings, like American Greetings, isn't talking. Frank O'Connell, president and chief executive officer of Gibson Greetings, and James Wilson, chief financial officer at the company, did not return four telephone calls from Crain's Cleveland Business last week.
Any possible overture American Greetings might make to buy its smalle
r competitor would not be a new maneuver. American Greetings tried twice during 1995 and 1996 to woo Gibson Greetings' board into selling the much smaller company.
Since then, Gibson Greetings has changed a lot.
The company closed its primary manufacturing plant in Cincinnati last year as a cost-cutting measure. Now all its card production is done on a contract basis.
Gibson Greetings also sold off over the last three years its gift wrap and party goods retail businesses, and a majority stake in its Mexican subsidiary Gibson de Mexico. The company is looking for a buyer for its Silly Slammer bean bag business.
Mr. Stein said those moves make Gibson Greetings a better buy today than it was three years ago. But not all analysts agree with that view.
'American Greetings wouldn't buy (Gibson Greetings) anymore because they shut down their manufacturing,' said Alan Dorsey, an analyst with Value Investing Partners in Westchester, Conn. 'That was their most valuable asset. What's left to buy? The balance sheet and customers. There's not a reason to buy those. American Greetings has been winning over those during the last 15 years.'
Gibson Greetings would be more affordable now than it was in March 1996, when American Greetings last offered to pay $18 for each of its competitors' shares outstanding.
By the end of trading last Thursday, Sept. 2, Gibson's stock closed at $4.13 a share, and it has a market capitalization of just $65 million.
'It's cheap enough that someone could afford to buy it for double the stock price,' said Sheldon Grodsky, director of research at Grodsky & Associates, a South Orange, N.J., brokerage firm.
It's also cheap enough to prompt the company's board to adopt a shareholders' rights plan, which they did late last month, Mr. Grodsky said. The plan will protect the value of shareholders' investment by encouraging anyone seeking to buy Gibson Greetings to negotiate with its board, according to Gibson's CEO, Mr. O'Connell, in a statement released by t
he company last week.
'I can see why they are creating a shareholders' rights plan,' Mr. Grodsky said. 'The vultures could be coming...My guess is that there is probably something of value American Greetings would see in Gibson. The question is, is there anything there American Greetings could salvage?'
Mr. Grodsky noted that Gibson Greetings is projecting 1999 revenue to come in at about $300 million, which would be a decrease of more than 25% from 1998 revenue of $407 million. It earned $2.2 million in 1998. Through the first six months of 1999, Gibson lost $27.8 million.